Sources of support

First came China’s National Sword policy in 2017, which banned imports of certain recyclables and disrupted the U.S. recycling and waste industry. Next, the COVID-19 pandemic, creating a global supply chain crisis further exacerbated by war in Ukraine. These stressors on the globalized economic ecosystem revealed how the U.S.’ reliance on outsourcing manufacturing and supplies was hurting its economic prosperity.

From challenge to opportunity, the U.S. federal government has established a multitude of new funding programs supporting the growth of innovative supply chains and circular economy solutions founded on economic prosperity, environment and social equity.

Positive outcomes

Industrial growth often has led to trade-offs between economic prosperity, environment and social equity outcomes. Yet, research shows positive outcomes are possible across all three areas.

Building a circular economy leads to economic prosperity through job creation and economic impact. The recycling industry today accounts for more than 500,000 jobs and more than $116 billion in economic impact, according to the “2021 Economic Impact Study, U.S.-based Recycling Industry,” done for the Institute of Scrap Recycling Industries (ISRI), Washington, by John Dunham and Associates.

With dedicated federal funds, communities nationwide are positioned to increase recycling access and processing infrastructure beyond present levels. Research shows opportunity for improvement across the circular economy system. For example, only 59 percent of U.S. residential households have access to curbside recycling services and just 52 percent participate in curbside recycling, according to The Recycling Partnership’s "2020 State of Curbside Recycling” report. This frames an opportunity to increase access and participation rates, capturing value from materials otherwise destined for the landfill and using those materials as inputs for U.S. manufacturers in a resilient, domestic supply chain.

Decreasing landfilled waste also helps protect the global environment. More than 40 percent of U.S. greenhouse gas (GHG) emissions are attributed to producing, transporting, using and disposing of material goods. Innovations to keep materials in use longer, prevent waste and source sustainable materials through local recycling efforts have significant potential to reduce these emissions, according to the U.S. Environmental Protection Agency (EPA).

The circular economy can be built embedding social equity in its structure. As supply chains become more localized, communities see greater impact. The NextCycle Washington Circular Infrastructure Gaps Analysis completed by RRS draws a connection between recycling and diversion services and community well-being. Lack of quality public services like waste and material management exposes communities to heightened amounts of illegal dumping, litter and a sense of disorder. These activities increase feelings of stress and depressive symptoms, decrease sense of belonging, public health and affinity and perpetuate other social and economic inequities.

More dedicated funding opportunities to support the growth of this industry have emerged as positive relationships between the environment, economy and society are increasingly linked to recycling and diversion. The level of funding support has been increased with the passage of the bipartisan Infrastructure Investments and Jobs Act and the Inflation Reduction Act, which are providing funding for state and local governments to increase recycling and diversion.

Strong, resilient systems

The U.S. is at the dawn of a new age of materials management supply chains supporting resilient and sustainable communities with federal funds. States across the country are taking advantage of this opportunity and blazing the way to localize equitable supply chains and build economic prosperity while taking care of the most precious resource: the natural environment. Nationwide, states are using RRS’s NextCycle model to develop innovative materials management programs.

By combining state and federal funds, Colorado, Michigan and Washington are building socially equitable solutions to divert sustainable materials from U.S. waste streams, deploying innovative technologies to streamline collection processes and developing end markets. NextCycle is a circular economy development program empowering states to support business models that prevent materials from being landfilled or incinerated through reuse, rescue, repair, recycling, composting and recovery. The program helps meet state and local waste diversion goals, keep materials in use longer and vet projects for future investment while also creating economic opportunities for local businesses, nonprofits and communities.

NextCycle was first established in Colorado in 2018. The program supports businesses and nonprofit organizations that are developing recycling end markets in the state. In Michigan, the circular economy development program is helping the state reach a 45 percent recycling rate by 2030. Through Michigan’s NextCycle program, technical support and fundraising assistance are provided to businesses, nonprofits and local governments that work anywhere along the diversion and recycling value chain. NextCycle Washington is designed to support businesses and nonprofit organizations that work on upstream models such as waste prevention and reuse and downstream models such as recycling and organic recovery.

NextCycle is building a pipeline of investable projects eligible for state and local grant programs with a goal to leverage private investment to grow the circular economy. The program’s outputs increase recycling and divert waste from landfills while fulfilling the objectives of people, planet and profit.

Federal funds in action

While NextCycle initially was funded by local and state agencies, federal funding has emerged as an important resource to supplement the operation and expansion of its programs across the nation. U.S. federal organizations such as the Economic Development Administration (EDA), EPA and the Department of Energy (DOE) are prioritizing investment in innovation and circular economy strategies.

EDA’s Build to Scale Program

The EDA is a bureau within the U.S. Department of Commerce that offers a Build to Scale (B2S) Program to increase regional capacity and strengthen economic activity that equitably and inclusively supports diverse technology innovators, entrepreneurs and startups.

The B2S program is being leveraged to extend the reach of NextCycle Michigan, allowing the program to provide consulting and technical support to disadvantaged communities and businesses in the state. The B2S funding is supporting these efforts through September 2025, while Michigan’s Department of Environment Great Lakes and Energy (EGLE) provides matching funds. Michigan’s B2S program is operated as a collaboration between RRS-led NextCycle Michigan and Centrepolis Accelerator at Lawrence Technological University. B2S allows for expanded support to businesses and organizations going above and beyond the level of support that is otherwise provided through NextCycle. Technical assistance through the B2S program helps businesses advance circular goals by facilitating networking, performing business analyses and assessments, assisting with project development and much more.

“The EDA funding allows Michigan to increase support for disadvantaged businesses and communities that are working to divert waste from landfills,” says Matt Flechter, recycling market development specialist with EGLE. “Additional funding expands the impact of NextCycle Michigan and supports our efforts to build a regional circular economy.”

Eighteen B2S projects are underway supporting counties, nonprofits and businesses in their efforts within the circular economy in the Great Lakes state.

EPA’s SWIFR grant program

Solid Waste Infrastructure for Recycling (SWIFR) is a new grant program authorized by the Save Our Seas 2.0 Act and funded through the Infrastructure Investment and Jobs Act. The program provides $275 million for solid waste infrastructure for recycling grants. From fiscal years 2022 to 2026, a minimum of $55 million per year are allocated to state government agencies working to:

• improve postconsumer materials management and infrastructure;
• support improvements to local postconsumer materials management and recycling programs; and
• assist local waste management authorities in making improvements to local waste management systems. 

SWIFR funds were granted to the Washington Department of Ecology to match the state’s support for the NextCycle program through 2025.

“The biggest challenge for growing local and equitable recycling supply chains has been providing funding to the innovators developing Washington’s end markets,” says Tina Schaefer, lead planner with the Department of Ecology Recycling Development Center. “Millions of dollars are needed to support businesses in these efforts, and sustained federal funding is a game-changer, helping us boost Washington’s circular economy.”

NextCycle Washington supported 45 businesses and organizations through the program’s circular accelerator and grant awards in its first year. The organizations benefiting from the program have created 70 jobs and are estimated to add 600 more jobs over the next five years.

NextCycle Washington is centered in social equity, committing to lowering barriers to participate, providing accessible communications and sharing power to hold the program accountable. SWIFR enables it to continue making such impacts for at least the next two years.

Small Business Innovation Research (SBIR) grants are intended to increase the commercialization of innovative technology while fostering entrepreneurship. Each year, more than $3 billion go to the SBIR program, and more than 5,000 grants ranging from $50,000 to $1 million are awarded. While SBIR support has been used for some circular economy projects, it has not been a specific focus. This year, the EPA called for SBIR proposals focused on circular economy and sustainable materials projects.

These grants are crucial for commercializing innovative environmental technologies. They provide funding to move research from the lab into the marketplace at a point in their development that private investors could consider too risky. SBIR can support state recycling and diversion activities by providing early-stage funding to emerging companies in those states that provide innovative new approaches to materials management. This can create a pipeline of solutions that can be nurtured and developed into commercial solutions within the state.

Department of Energy

The DOE has a targeted initiative through its Office of Energy Efficiency and Renewable Energy related to recycling and waste diversion focused on battery recycling. Referred to as the Bipartisan Infrastructure Law (BIL) Electric Drive Vehicle Battery Recycling and 2nd Life Applications, the program is investing in research, development and demonstration of electric vehicle battery recycling as well as in second-life applications for these batteries.

Several NextCycle teams are pursuing this funding to develop infrastructure to process spent EV batteries, including Houghton, Michigan-based Revex Technologies, which won the 2023 NextCycle Michigan Showcase for advanced materials and design and received a DOE grant of more than $8 million to commercialize technology that recovers rare earth metals such as nickel and cobalt from end-of-life batteries. Revex is using the funding for a demonstration project.

As the number of end-of-life EV batteries is projected to grow over the next two decades, developing circular processes to extract rare metals from them is essential to maintaining this developing industry as the mining of these metals faces geopolitical and environmental challenges. Pairing federal funding with technical support through NextCycle offers a clear path for accelerating this industry.

Making the funding count

It is clear circular economy initiatives attract support across political lines as they address environmental concerns around climate change and pollution while creating domestic jobs, developing essential infrastructure and growing local economies.

The growing trend to support materials management systems and circular economy development is sparking a new interest in U.S. resilience in a tumultuous global economic ecosystem. Colorado, Michigan and Oregon are the start of a new wave of developing a triple-bottom-line circular economy. Other states are positioning themselves to follow suit so they are not left behind in the marketplace.

Bryce Hesterman is a senior consultant with RRS, Ann Arbor, Michigan, and can be contacted at bhesterman@recycle.com. Amanda Moore is the marketing manager at RRS and can be emailed at amoore@recycle.com. Visit https://recycle.com for more information.